In its analysis, Harbor Capital compared the average fee that core-plus bond funds charge with a proxy for their returns -- the yield to maturity for the Bloomberg U.S Aggregate Bond Index.
Harbor Capital found that the yield generated by the benchmark has fallen faster over time than the average fees charged by core plus managers. As a result, a greater proportion of returns have been steadily going to managers at the expense of investors.
In 2001, core-plus investors got to keep 89% of their yield and paid just 11% in management fees, while they now hand over 31% of their yield and retain just 69%.
“The question becomes whether or not these funds can continue to deliver returns that justify what they are charging,” Johnson said.
This article was provided by Bloomberg News.